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Tech brands warned over falling demand for smartphones & tablets, plus IoT privacy fears

With the latest and greatest in tech set to be unveiled at this week's Consumer Electronics Show (CES), consultancy firm Accenture has published a survey revealing waning consumer demand for smartphones and tablets, plus mounting feats over wearables and their vulnerability to hackers.

Accenture claims demand for products such as the latest Samsung smartphone, or iPad peaked in 2014, that demand for such products plateaued in the last 12 months, and is about to dip in 2016. Meanwhile uptake of wearables, and connected home devices will continue to stall as headlines over hacking continue to stoke privacy fears.

Despite consumers' eagerness to embrace the convenience posed by such devices, manufacturers peddling these wares will have to surmount this dual trend, with John Curran, managing director with Accenture’s Communications, media, and technology group, also noting this also poses an opportunity for the IT security sector.

Privacy fears frustrate IoT take-up

The comprehensive poll surveyed 28,000 people across 28 different markets finding 47 per cent of participants cited security concerns and privacy risks among the top three barriers to buying a connected device, such as a smartwatch or any other Internet of Things (IoT) service, such as a smarthone thermostat.

Of the participants that did own an IoT device or service, 69 per cent claimed they knew such products were vulnerable to hacking, leading to the potential loss of personal or commercially sensitive information.

As a result, 37 per cent of those participants planning to purchase a further IoT device or service in the next year claimed they would practice increased amounts of caution next time around, whilst 24 per cent claimed they had postponed any such purchase.

Additionally, 18 per cent quit using their IoT devices or terminated their IoT services until they can get safer guarantees.

Accenture's Curran told The Drum: "Accenture is seeing flat to very slight growth in most IoT device categories with no appreciable increase in consumer purchase intent over the next twelve months. Until the security concerns are addressed, sales of IoT devices are likely to remain relatively modest."

However, he also added that he believed that IoT devices had the potential to acheive mass market take-up once such privacy concerns are allayed.

"The security concerns will continue to slow this market’s growth. Consumers will be careful about what data is collected and shared, on which devices, and under what conditions or agreements," he added.

"Some will no doubt continue to buy IoT devices such as fitness monitors and smartwatches. Their security concerns will not be intense enough to override the benefits these products bring to their lives. But the overall market size will not be nearly as large as it could be because of the growing security concerns."

Smartphone and tablet demand has peaked

The survey also found a waning demand for traditional wireless devices such as smarpthones and tablets as less than half (48 per cent) of respondents said they intend to buy a smartphone this year, down six points from the 54 per cent who said they planned to buy one last year.

Additionally, the number of respondents that said they plan to buy a new TV or a tablet PC this year - 30 per cent and 29 per cent, respectively - also dropped from 38 per cent last year for both device types.

Curran added: "It’s a combination of market saturation, a lack of new breakthrough innovations, and privacy concerns. In terms of saturation, our survey finds that about 80 per cent of respondents own smartphones, up from 53 per cent in 2012.

"And, for the most part, they are happy with their devices and not seeking new features like they have four to five years ago.

"With so many people owning a smartphone, it makes sense that the growth in sales has begun to slow down in the past two years."

Curran further explained that one of the most important ways smartphone and tablet manufacturers can overcome this slow growth challenge is to focus on providing innovative services via such devices.

"By bringing together the device, the service, and the analytics to power the service in a superior customer experience, companies can re-ignite consumer demand," he said.

"By offering innovative, practical solutions to problems consumers did not know could be solved, companies can reawaken consumers’ imaginations and drive another wave of upgrades."

Long term success will depend on security

With almost 70 per cent of consumers expressing awareness of recent hacker attacks on connected devices, Curran further suggested that consumers are increasingly seeing the collection and analysis of their personal data as "a double-edge sword."

He added: "Although more data sharing benefits consumers in many ways, in others it can make them more vulnerable because more devices and people have access to the private data."

However, he additionally noted that consumer electronics brands - or service providers - that provide consumers with assurances that their personal information is protected and that all cusotomers are in control, can eventually surmount fears over hacking.

"These opportunities range from cloud-based security services to on-device biometric technologies, such as fingerprint scanning," said Curran.

"Biometrics will be supplemental and could ultimately replace passwords, which consumers are finding more cumbersome and difficult to manage."